Internal Revenue Service (IRS)

IRS misses $2.4bn in millionaire taxes

Auditors reportedly only collected 39% of the more than $4bn owed in unpaid taxes by millionaires earning over $1.6m annually

The Internal Revenue Service (IRS) has reportedly failed to collect over $2.4bn in back taxes from wealthy individuals.

According to a Treasury Department watchdog report, auditors only collected 39% of the more than $4bn owed in unpaid taxes by millionaires earning over $1.6m annually.

While the IRS does notify a taxpayer when it finds potential underpaid taxes, many of these cases are not linked to enforcement teams and therefore go unsolved.

The Treasury Body report claimed that more emphasis should be placed on the taxpayer’s income when deciding whether a case should be pursued or not.

The report said: “With its limited resources, it is important to determine if the IRS is effectively addressing nonpayment by high-income taxpayers.

“Instead, it places more significance on other factors, such as the dollar amount of the balance due.”

However, IRS management responded stating that it “disagreed with this recommendation”.

It said: “High income is already considered as a high priority in the case routing and selection process. The IRS asserts that its predictive models used in case selection are built on robust historical datasets. 

“It further asserts that its model building process determines which variables are most effective in accurately estimating the percent of delinquent taxes that will be collected, and how these variables should be weighted.”

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